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ConocoPhillips asset sale plan should unlock equity's hidden value, Citi says

Published 11/11/2016, 05:25 PM
Updated 11/11/2016, 05:25 PM
ConocoPhillips asset sale plan should unlock equity's hidden value, Citi says
  • ConocoPhillips’ (NYSE:COP) plan to sell “stranded” assets was the one big surprise from the company’s investor update yesterday, Citigroup (NYSE:C) analysts say, as they continue to rate the shares a Buy.
  • Citi says the core elements of COP’s strategy update had by and large been flagged to the market through the course of this year - rebalancing to a lower oil price, boosting profitability, and a promise to increase returns to shareholders - but "one key, new, and different element" is the promise to sell $5B-$8B of North American gas assets - which the firm says the market regards as stranded with essentially no value - and return $3B of the capital to shareholders.
  • COP is looking to demonstrate that there is some value in its stranded portfolio, targeting North American gas where there are buyers who believe in price recovery, which Citi says suggests that the majority of the $5B-$8B in deals is close to being concluded.

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