(Reuters) - ConocoPhillips (COP.N) is selling its stake in a Canadian oil sands project to Exxon Mobil Corp (XOM.N) and Imperial Oil Ltd (IMO.TO) for about $720 million as it focuses on its U.S. shale oil and natural gas operations.
The all-cash deal involves the sale of 226,000 acres of undeveloped land, roughly 93 miles south of Fort McMurray, Alberta, to Exxon Mobil's Canadian unit and Imperial, which is 70 percent controlled by Exxon.
After the deal closes, Exxon Canada will own a 72.5 percent interest in the land, known as the Clyden oil sands leasehold, with Imperial controlling the rest.
The deal is a natural fit for Exxon, which has invested $11 billion in its Kearl oil sands project in northwest Alberta, and gives it access to even more oil to boost its global daily production, which has slid in recent quarters.
Calgary-based Imperial already operates four oil sands projects in Canada and said the stake it is buying from Conoco is a "high-quality addition" to its portfolio.
Conoco, which has been trying to sell the Clyden stake for months, expects to record a after-tax gain of about $450 million from the sale.
The deal, worth about $3,186 per acre, is a "fair price" for Conoco, said Simmons & Co analyst Jeff Dietert, considering the Clyden land is largely undeveloped and similar deals since 2005 have sold for an average price of $2,550 per acre,
"We think this is a positive deal for (Conoco) and marks the first of potentially more deals in their oil sands rebalancing efforts as they reduce their oil sands footprint through the remainder of this year and into next," he said.
Exploration and production companies such as Conoco and Marathon Oil Corp (MRO.N) have placed billions of dollars of oil and gas properties up for sale in the past year to focus capital on projects that generate higher returns.
Since the beginning of 2012, Conoco has sold stakes in projects in Montana, North Dakota, Australia, Nigeria and Algeria for a total of about $13.5 billion.
On a conference call last week with investors, Conoco Chief Executive Ryan Lance said the company would continue to sell "non-strategic assets," such as oil sands properties, and use the cash to invest in growth areas like the Texas Eagle Ford shale.
"These are great assets, but one where we believe we're a bit overweighted in our portfolio today," Lance said on the call, speaking of Canadian oil sands and other assets he may sell.
Last year Conoco spun off its refining operations into Phillips 66 (PSX.N).
Investors mostly shrugged off the deal. Shares in Conoco rose 0.6 percent to $66.91. Exxon added 0.4 percent to $91.66, while Imperial dipped 0.1 percent to $41.94.
Reporting by Ernest Scheyder in New York and Sayantani Ghosh in Bangalore; Editing by Sriraj Kalluvila and Jeffrey Benkoe