Web Date: August 17, 2011
ConocoPhillips To Split Operations
Integrated oil production and refining firm ConocoPhillips’ plan to split into two independent companies has left the fate of the firm’s polypropylene business and chemicals joint venture with Chevron, Chevron Phillips Chemical (CP Chem), undecided.
Late last week ConocoPhillips said it would hive off its refining and marketing operations into a separate publicly-owned firm sometime in the first half of 2012. ConocoPhillips would remain a “pure play exploration and production company.” In emulating its competitor Marathon which finalized its split earlier this month, ConocoPhillips said the divorce will improve shareholder returns.
But at this early stage the firm, which had revenues of $189 billion in 2010, said it had not yet figured out exactly how it would split assets between the two firms. Up in the air is which of the two will get the 775 million lb per year polypropylene operation at the Bayway refinery in Linden, N.J. Also undecided is where ConocoPhillips’ 50% interest in CP Chem, a maker of aromatics, alpha olefins, styrenics, and polymers with $11.2 billion in 2010 sales, will go.
In a meeting with analysts, CEO Jim Mulva said, “With respect to our joint venture of chemicals that we do with Chevron..., we haven’t made a decision yet.... That is going to be done over the next several months.” According to a company spokesman, the firm has teams working on split-up details now.
Some of the separation details will have to take into account locations shared by ConocoPhillips and CP Chem. For instance, the former has a refinery in Sweeny, Texas, where CP Chem operates ethylene and propylene units. ConocoPhillips also has a refinery in Borger, Texas, where CP Chem makes organosulfur chemicals, solvents, and mining chemicals.
However, the separation still requires a number of steps before it can be completed. Those steps include regulatory and tax authority approvals, separation and intercompany agreements, and final board approval.
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