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ConocoPhillips Inks Deal to Sell $1.4B Australia-West Assets

Zacks Equity Research

ConocoPhillips COP has announced an accord with Santos Ltd to divest its Australia-West properties. The deal, anticipated to conclude in the March quarter of 2020, will likely generate proceeds of $1.39 billion.   

The assets to be divested include the company’s 37.5% stakes in Barossa offshore project that entails the development of Barossa and Caldita gas-condensate fields. The agreement also encompasses the company’s 50% interests in the Athena field and 40% stakes in Poseidon field. Moreover, ConocoPhillips will divest its 56.9% stake in the Darwin liquefied natural gas (LNG) facility. Notably, the LNG plant has a production capacity of 3.7 million tonnes per annum (MTPA). The offshore field — Bayu-Undan —provides gas to the facility.

Per Reuters, the Bayu-Undan gas field is anticipated to dry up by 2022 and Santos is currently working on a plan to develop the Barossa field. Importantly, if Santos reaches a final investment decision for Barossa field development, it will pay additional $75 million to ConocoPhillips.

The leading exploration and production player stated its aim to utilize the procced for general corporate purposes. Investors should know that the sale reflects the company’s strong focus on the profitable shale plays in the United States. In other words, ConocoPhillips will be allotting its capital for other developments that are likely to generate lucrative returns for shareholders in the long run.

ConocoPhillips stated that through the first half of 2019, the to-be-divested assets produced nearly 50 thousand barrels of oil equivalent per day (MBOE/D). Moreover, as of 2018-end, the properties recorded a proved reserve of roughly 39 million barrels of oil equivalent (BOE).

The company currently carries a Zacks Rank #3 (Hold). Meanwhile, some better-ranked stocks in the energy space are Crescent Point Energy Corp CPG, Matrix Service Company MTRX and Shell Midstream Partners LP SHLX. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Crescent beat the Zacks Consensus Estimate in three of the trailing four quarters, the average positive earnings surprise being 235.1%.

Matrix Service has managed to beat the Zacks Consensus Estimate for earnings in three of the past four quarters.

Shell Midstream has posted an average positive earnings surprise of 3.8% for the past four quarters.

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