UPDATE: ConocoPhillips to Sell Interest in Kashagan to ONGC Videsh
ConocoPhillips (NYSE: COP) today announced that it has notified government authorities in Kazakhstan and its co-venturers of the company's intent to sell its 8.4 percent interest in the North Caspian Sea Production Sharing Agreement (Kashagan) to ONGC Videsh Limited.
Subject to various government approvals, Kazakhstan state preemption rights and co-venturers' preemption rights, ONGC Videsh Limited, the international arm of Oil and Natural Gas Corporation Limited, India, would acquire ConocoPhillips' interest in Kashagan, which is located in the Kazakh sector of the Caspian Sea.
The transaction is expected to close in the first half of 2013. Expected proceeds are approximately $5 billion, which represents the purchase price plus expected working capital and customary adjustments at closing.
At Sept. 30, 2012, the carrying value of the net assets related to ConocoPhillips' interest in Kashagan was approximately $5.5 billion. ConocoPhillips expects to record an after-tax impairment of approximately $400 million in the fourth quarter of 2012 to reduce the carrying value to fair value.
Through Sept. 30, 2012, the company's 2012-13 disposition program has yielded proceeds of $2.1 billion. Once closed, this transaction would increase that total to approximately $7 billion, and strongly position the company to accomplish its target of $8-$10 billion by the end of 2013.
The proposed sale of its Kashagan interest is part of ConocoPhillips' plan to increase value for shareholders through focused capital investments and a commitment to deliver growth in production and cash margins, improved returns on capital, and sector-leading shareholder distributions.
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