ConocoPhillips announced that it would separate its upstream and downstream business arms that will see the US oil firm focus firmly on exploration and production.
The plan to divide the oil company into two publicly traded entities was made by ConocoPhillips CEO Jim Mulva at the end of last week. The split is expected to come into affect by the first half of next year.
Mulva in an interview with the FT discussed the reasoning behind the split and why the refining arm of ConocoPhilips was holding the upstream side of the business. “[The split] is a result of more and more competition. The opportunities to continue to grow as we have in the last ten years have changed dramatically [for the worse],” Mulva said.
Mulva did add in a conference call that the split would not prevent refinery sales.
Mulva revealed that the company had looked off-and-on for a number of years at splitting the integrated company, and the decision to do so was taken as the result of a review that started last fall.
The new downstream company will be "strong" and have "positive cashflow," Mulva added. The move will help transform ConocoPhillips into a strong independent with the exploration and production arm estimated to have twice the proved reserves of Oxy and Apache, according to Barclays Capital.
Decisions on what to do with midstream assets and chemicals joint ventures will be "determined over the next several months," Mulva said.
Under the terms of the plan, no shareholder vote would be needed for the separation to go ahead. The plan would be subject to regulatory approvals and a final decision from the board.
