ConocoPhillips to spin off downstream business
ConocoPhillips’ board of directors has approved the separation of the company’s Refining & Marketing and Exploration & Production businesses into two stand-alone, publicly-traded corporations via a tax-free spin of the refining and marketing business to shareholders, the company announced on Thursday.
Following the completion of the proposed separation, ConocoPhillips will be a pure-play exploration and production company with strong returns and investment opportunities.
As a separate company, the refining and marketing business of ConocoPhillips will be a leading pure-play independent refiner with a competitive and diverse set of assets, the company said.
In addition to executing the initiatives to improve downstream returns through portfolio rationalization and other operating efficiencies, the new downstream company will be able to further position its portfolio by pursuing transactions and investments across the value chain, officials said.
"Consistent with our strategy to create industry-leading shareholder value, we have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies," said Jim Mulva, CEO.
"Both companies will continue to benefit from the size and scale of their significant high-quality asset bases and free cash flow generation, allowing them to invest and create shareholder value in a changing environment."
The separation of the companies is expected to be completed in the first half of 2012.
Upon completion of the separation, Mulva intends to retire.
Until that point, he will continue to serve as ConocoPhillips’ CEO and lead the separation efforts.
The work to determine the detailed allocation of assets and liabilities, the management and governance of the companies, and the mechanics of completing the separation will begin immediately.
Further details will be disclosed as they are determined over the next several months, the company said.
The contemplated separation of ConocoPhillips into two companies does not require a shareholder vote.
The separation is subject to market conditions, customary regulatory approvals, the receipt of an affirmative IRS ruling, the execution of separation and intercompany agreements, and final board approval.
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