|
Oil Patch Insider: ConocoPhillips’ Alaska assets on the market? Probably not
Worldwide it has been a tough year for ConocoPhillips. Among other challenges, in January the Houston-based major took $34 billion in write-downs on its 20 percent stake in Russia’s Lukoil and its 2005 acquisition of U.S. gas producer Burlington Resources.
To “improve its financial position and increase returns on capital” ConocoPhillips recently said that during the next two years it intends to sell about $10 billion of its assets and reduce its 2010 capital budget $1.5 billion, from $12.5 billion in 2009 to $11 billion in 2010.
Proceeds from the sales of its assets would be used to pay off debt and accelerate the company’s return to its target debt-to-capital ratio of 20-to-25 percent.
ConocoPhillips is not yet divulging just what assets it might sell, but its Alaska properties stand a better chance of staying off the chopping block because Alaska is one of the most profitable places in the world that ConocoPhillips does business.
Alaska oil and gas production makes up about 12 percent of ConocoPhillips’ worldwide output. In the first quarter of this year, Alaska operations earned the company $240 million, or 29 percent of its worldwide exploration and production income.
In the second quarter, ConocoPhillips had $725 million in E&P worldwide earnings: More than 55 percent of that, $404 million, came from its Alaska business.
Still, given the uncertainties with the Obama administration regarding the federal waters of the Chukchi Sea, and the lack of federal incentives for offshore Alaska developments, there is a chance ConocoPhillips might consider selling its Chukchi acreage, Petroleum News sources say.
But it is more likely the company will sell its 9 percent stake in Canadian oil sands producer Syncrude or its 20 percent stake in Lukoil, UBS Securities LLC said in a recent report to its customers.
ConocoPhillips might also put its North America natural gas assets on the market, in light of its “more cautious” outlook for U.S. fuel prices, said UBS, which also named assets in Algeria, Nigeria and Libya as other possibilities
New energy site explains topics in plain language Energy Explained is a new Web portal launched Oct. 7 by the U.S. Energy Information Administration, or EIA, as part of Energy Awareness Month.
Dubbed the “most comprehensive energy education resource available from the U.S. government,” Energy Explained uses plain language and graphics to teach visitors about every facet of energy.
For example, the site explains where gasoline comes from, what determines the price of electricity, how much renewable energy the United States uses and hundreds of other energy topics.
Visit Energy Explained at this Web address: www.eia.doe.gov/energyexplained.
Costs escalate to $38 for ‘new Prudhoe’ The cost of developing the world’s largest oil field since the discovery of Alaska’s Prudhoe Bay has escalated to $38 billion, Kairgeldy Kabyldin, the chief executive of Kazakhstan’s state oil and gas company KazMunaiGas, said in early October.
According to press reports from a conference in Kazakhstan, the development costs are up $7 billion for the 4 billion-barrel Kashagan oil field, which is in the northeast part of the Caspian Sea.
“The cost of developing (Kashagan) is estimated at $38 billion,” Reuters cited Kabyldin as telling reporters at the conference. He offered no explanation for the increase. In July, Kazakh Energy Minister Sauat Mynbayev said Kashagan field costs would fall by at least $1 billion from an estimate of $31 billion.
Kashagan, scheduled to start producing crude by the end of 2012, will initially yield 450,000 barrels of oil per day, but increase to 1.5 million barrels per day following the third and final stage of its development.
In September Prudhoe Bay produced 344,805 bpd.
Kashagan is run by ExxonMobil, ConocoPhillips, Shell, Eni, KazMunaiGas and Inpex Holdings.
Editor’s note: Oil Patch Insider is compiled by Kay Cashman. Send leads to Kay at [email protected] or call her at 907-522-9469.
| 