ConocoPhillips announces agreement to sell interest in Ursa and Europa Fields

Rhea-AI Summary

ConocoPhillips (NYSE: COP) has announced an agreement to sell its interests in the Ursa and Europa Fields and Ursa Oil Pipeline Company to Shell subsidiaries for $735 million, subject to customary closing adjustments. The transaction includes ConocoPhillips' 15.96% interest in the Ursa Field, 1% interest in the Europa Field, and an overriding royalty interest in the Ursa Field.

The assets being sold currently produce approximately 8 thousand barrels of oil equivalent per day (MBOED). The deal is expected to close by the end of Q2 2025, with an effective date of January 1, 2025. The proceeds will be used for general corporate purposes, contributing to ConocoPhillips' progress toward its $2 billion disposition target.

Positive

• Sale proceeds of $735 million strengthen company's cash position
• Transaction advances progress toward $2 billion disposition target
• Divestment aligns with strategy to optimize portfolio by selling non-core assets

Negative

• Loss of 8 MBOED production capacity from divested assets

Insights

Energy Industry Financial Analyst

The $735 million sale of ConocoPhillips' interests in the Ursa and Europa Fields represents a strategic transaction that warrants careful analysis. The deal values the divested production of 8 MBOED at approximately $92,000 per flowing barrel, which is notably above the industry average for mature Gulf of Mexico assets, suggesting favorable deal terms for ConocoPhillips.

This transaction demonstrates strong execution of ConocoPhillips' portfolio optimization strategy. When combined with previous dispositions, it shows significant progress toward their $2 billion disposition target. The relatively small production impact (0.4% of total production) versus the substantial proceeds indicates effective high-grading of their asset base.

Several key implications emerge from this deal:

• The transaction strengthens ConocoPhillips' balance sheet flexibility while having minimal impact on their production profile
• The effective date of January 1, 2025, means the company will retain the cash flows from these assets through closing, expected by Q2 2025
• The inclusion of an overriding royalty interest in the Ursa Field provides ongoing exposure to potential upside without operational responsibilities

For Shell, this acquisition aligns with their strategy of consolidating positions in core areas where they already have operational expertise and infrastructure. The Gulf of Mexico remains a key focus area for major operators due to its stable regulatory environment and established infrastructure.

HOUSTON--(BUSINESS WIRE)-- ConocoPhillips (NYSE: COP) today announced it has entered into an agreement to sell its interests in the Ursa and Europa Fields and Ursa Oil Pipeline Company LLC to Shell Offshore Inc. and Shell Pipeline Company LP, subsidiaries of Shell plc, for $735 million subject to customary closing adjustments. The transaction also includes an overriding royalty interest in the Ursa Field. Proceeds from this transaction will be used for general corporate purposes.

“Combined with previously announced dispositions, this transaction reflects our ongoing commitment to further strengthen our portfolio by divesting noncore assets and shows significant progress toward our $2 billion disposition target,” said Andy O’Brien, senior vice president, Strategy, Commercial, Sustainability & Technology.

Full-year 2024 production associated with the company’s 15.96% interest in the Ursa Field and 1% interest in the Europa Field was approximately 8 thousand barrels of oil equivalent per day (MBOED). The transaction is subject to customary closing conditions and is expected to be completed by the end of second quarter of 2025. The effective date of the transaction is Jan. 1, 2025.

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About ConocoPhillips

ConocoPhillips is one of the world’s leading exploration and production companies based on both production and reserves, with a globally diversified asset portfolio. Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 14 countries, $123 billion of total assets, and approximately 11,800 employees at Dec. 31, 2024. Production averaged 1,987 MBOED for the twelve months ended Dec. 31, 2024, and proved reserves were 7.8 BBOE as of Dec. 31, 2024. For more information, go to www.conocophillips.com.

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

This news release contains forward-looking statements as defined under the federal securities laws. Forward-looking statements relate to future events, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, costs and plans, objectives of management for future operations, the anticipated benefits of our acquisition of Marathon Oil Corporation (Marathon Oil), the anticipated impact of our acquisition of Marathon Oil on the combined company’s business and future financial and operating results and the expected amount and timing of synergies from our acquisition of Marathon Oil and other aspects of our operations or operating results. 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Factors that could cause actual results or events to differ materially from what is presented include, but are not limited to, the following: effects of volatile commodity prices, including prolonged periods of low commodity prices, which may adversely impact our operating results and our ability to execute on our strategy and could result in recognition of impairment charges on our long-lived assets, leaseholds and nonconsolidated equity investments; global and regional changes in the demand, supply, prices, differentials or other market conditions affecting oil and gas, including changes as a result of any ongoing military conflict and the global response to such conflict, security threats on facilities and infrastructure, global health crises, the imposition or lifting of crude oil production quotas or other actions that might be imposed by OPEC and other producing countries or the resulting company or third-party actions in response to such changes; the potential for insufficient liquidity or other factors, such as those described herein, that could impact our ability to repurchase shares and declare and pay dividends, whether fixed or variable; potential failures or delays in achieving expected reserve or production levels from existing and future oil and gas developments, including due to operating hazards, drilling risks and the inherent uncertainties in predicting reserves and reservoir performance; reductions in our reserve replacement rates, whether as a result of significant declines in commodity prices or otherwise; unsuccessful exploratory drilling activities or the inability to obtain access to exploratory acreage; failure to progress or complete announced and future development plans related to constructing, modifying or operating E&P and LNG facilities, or unexpected changes in costs, inflationary pressures or technical equipment related to such plans; significant operational or investment changes imposed by legislative and regulatory initiatives and international agreements addressing environmental concerns, including initiatives addressing the impact of global climate change, such as limiting or reducing GHG emissions, regulations concerning hydraulic fracturing, methane emissions, flaring or water disposal and prohibitions on commodity exports; broader societal attention to and efforts to address climate change may cause substantial investment in and increased adoption of competing or alternative energy sources; risks, uncertainties and high costs that may prevent us from successfully executing on our Climate Risk Strategy; lack or inadequacy of, or disruptions in, reliable transportation for our crude oil, bitumen, natural gas, LNG and NGLs; inability to timely obtain or maintain permits, including those necessary for construction, drilling and/or development, or inability to make capital expenditures required to maintain compliance with any necessary permits or applicable laws or regulations; potential disruption or interruption of our operations and any resulting consequences due to accidents, extraordinary weather events, supply chain disruptions, civil unrest, political events, war, terrorism, cybersecurity threats or information technology failures, constraints or disruptions; liability for remedial actions, including removal and reclamation obligations, under existing or future environmental regulations and litigation; liability resulting from pending or future litigation or our failure to comply with applicable laws and regulations; general domestic and international economic, political and diplomatic developments, including deterioration of international trade relationships, the imposition of trade restrictions or tariffs relating to commodities and material or products (such as aluminum and steel) used in the operation of our business, expropriation of assets, changes in governmental policies relating to commodity pricing, including the imposition of price caps, sanctions or other adverse regulations or taxation policies; competition and consolidation in the oil and gas E&P industry, including competition for sources of supply, services, personnel and equipment; any limitations on our access to capital or increase in our cost of capital or insurance, including as a result of illiquidity, changes or uncertainty in domestic or international financial markets, foreign currency exchange rate fluctuations or investment sentiment; challenges or delays to our execution of, or successful implementation of the acquisition of Marathon Oil or any future asset dispositions or acquisitions we elect to pursue; potential disruption of our operations, including the diversion of management time and attention; our inability to realize anticipated cost savings or capital expenditure reductions; difficulties integrating acquired businesses and technologies; or other unanticipated changes; our inability to deploy the net proceeds from any asset dispositions that are pending or that we elect to undertake in the future in the manner and timeframe we anticipate, if at all; the operation, financing and management of risks of our joint ventures; the ability of our customers and other contractual counterparties to satisfy their obligations to us, including our ability to collect payments when due from the government of Venezuela or PDVSA; uncertainty as to the long-term value of our common stock; and other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission. Unless legally required, ConocoPhillips expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Information – This release may include non-GAAP financial measures, which help facilitate comparison of company operating performance across periods and with peer companies. Any historical non-GAAP measures included herein will be accompanied by a reconciliation to the nearest corresponding GAAP measure either within the release or on our website at www.conocophillips.com/nongaap.

Cautionary Note to U.S. Investors – The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We may use the term “resource” in this release that the SEC’s guidelines prohibit us from including in filings with the SEC. U.S. investors are urged to consider closely the oil and gas disclosures in our Form 10-K and other reports and filings with the SEC. Copies are available from the SEC and from the ConocoPhillips website.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250221421056/en/

Dennis Nuss (media)

281-293-1149

dennis.nuss@conocophillips.com

Investor Relations

281-293-5000

investor.relations@conocophillips.com

Source: ConocoPhillips

FAQ

How much is ConocoPhillips (COP) selling its Ursa and Europa Fields interests for?

ConocoPhillips is selling its interests in the Ursa and Europa Fields to Shell subsidiaries for $735 million, subject to customary closing adjustments.

When will ConocoPhillips (COP) complete the Ursa and Europa Fields sale?

The transaction is expected to be completed by the end of the second quarter of 2025.

How much production will COP lose from selling Ursa and Europa Fields?

ConocoPhillips will lose approximately 8 thousand barrels of oil equivalent per day (MBOED) in production from the sale.

What is ConocoPhillips' (COP) total disposition target?

ConocoPhillips has set a disposition target of $2 billion, and this sale contributes to progress toward that goal.

What ownership stakes is COP selling in the Ursa and Europa Fields?

ConocoPhillips is selling its 15.96% interest in the Ursa Field and 1% interest in the Europa Field.