BreakingviewsCapital Calls: ConocoPhillips ditches Canada stake, finally

Reuters
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The sun sets behind a crude oil pump jack in the Permian Basin in Texas, November 24, 2019. REUTERS/Angus Mordant

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BLACK ON BLACK. ConocoPhillips (COP.N) is seizing the moment. On Tuesday, the independent U.S. oil driller said it planned to sell shares of Cenovus Energy (CVE.TO) it received in exchange for Canadian assets in 2017. For Conoco boss Ryan Lance, the timing looks as good as any.

Four years ago Conoco agreed to sell oil and gas properties to the Canadian driller for $13 billion, with about $2.7 billion coming in shares. The value of that stake is roughly a third lower than when the deal was announced, but up more than fourfold from last year's low.

Conoco’s shares have been on a similar though less pronounced path. That’s partly because the price of Canadian oil is more volatile than where Conoco drills because it's expensive to produce and transport – it averaged around $3 a barrel during the April 2020 nadir when West Texas Intermediate traded at $17 and Brent at $27.

Lance plans to offload Conoco's stake in Cenovus systematically through 2022. Fingers crossed that in terms of valuation, its relative good fortune lasts. (By Lauren Silva Laughlin)

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This story has been corrected, amending headline to show Conoco is selling its stake in a Canadian company.

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