October 31, 2013 / 12:48 PM / 5 years ago

UPDATE 3-Conoco turns homeward for oil growth

* Third-quarter profit up 39 pct, beats estimates

* Trims full-year production forecast, cites Libya disruption

* A Libya sale would be difficult-CFO

By Garima Goel and Anna Driver

Oct 31 (Reuters) - ConocoPhillips, abandoning higher-risk assets in favor of oilfields closer to home, said it expects proceeds of nearly $9 billion from the sale of its interests in Kazakhstan, Algeria and Nigeria.

Conoco’s plan to focus on North America was reinforced on Thursday when the largest independent U.S. oil producer trimmed its output forecast for the year due to unrest in Libya.

The reduced forecast was the main black spot in Houston-based Conoco’s third-quarter results. The company reported a better-than-expected 39 percent jump in profit, due in part to higher oil and natural gas prices.

ConocoPhillips, like rival U.S. oil producers Occidental Petroleum Corp and Hess Corp, is selling some of its assets abroad to reduce exposure to conflict and political risk, focusing instead on the shale oil boom at home.

“What they are doing now is derisking the portfolio by returning more toward North America,” said Brian Youngberg, an energy company analyst at Edward Jones in St. Louis.

Conoco has sold its minority interest in the international consortium developing the Kashagan project in Kazakhstan - a mammoth project in the Caspian Sea that has proven to be the world’s most expensive oilfield.

The company has struck separate deals to sell its Algerian business unit to Indonesian state oil firm Pertamina, and its Nigerian assets to a local oil firm, Oando.

Conoco said on Thursday that these three transactions were expected to generate proceeds of about $9 billion. It did not say when it expected to realize these proceeds.

With the Kashagan sale having closed, it was a “clear positive” that Conoco would now be able to access the proceeds, analysts at Houston-based energy investment bank Simmons & Co wrote in a note.


The company said its third-quarter profit, which rose to $2.5 billion from $1.8 billion a year earlier, was also bolstered by the sale of the undeveloped Clyden oil sands in Canada and assets in Trinidad and Tobago.

But Conoco, citing “ongoing production disruptions” in Libya, said it expected full-year production from continuing operations to be in a range of 1.505 million to 1.515 million barrels of oil equivalent (boe) per day.

It had earlier forecast output in 2013 to be 1.515 million to 1.530 million boe per day.

“Libya for us is about 50,000 barrels a day that’s now at zero essentially and we don’t have any good insight as to when that might return to production,” Conoco Chief Financial Officer Jeff Sheets said in an interview. “We don’t anticipate we are going to do anything with our Libya position in the near term because there is a fair bit of uncertainty there.”

A sale would be difficult in today’s market, the executive said.

Libya’s oil exports have plunged in recent weeks to around 10 percent of its capacity before the 2011 civil war broke out, as renewed protests have halted operations at ports and fields.

The interim government there has struggled to kick-start development and deliver on expectations of a higher living standard since Muammar Gaddafi’s fall.

Hess Corp, which reported its third-quarter results this week, also cited unrest in Libya as the main reason for a sharp reduction in production and profit.

“Nothing really positive is coming at this point from Libya for anybody,” said Youngberg.

Back home in the United States, production from the Eagle Ford, Bakken and Permian shale deposits rose 40 percent in the third quarter, Conoco said.

Excluding one-time items, the company earned $1.47 per share in the quarter ended Sept. 30, compared with the average analysts’ estimate of $1.45, according to Thomson Reuters I/B/E/S.

Conoco’s shares edged up 49 cents, or less than 1 percent, to $73.74 on the New York Stock Exchange.

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