08 August 2013, News Wires – ConocoPhillips is selling its stake in a Canadian oil sands project to Exxon Mobil Corp and Imperial Oil Ltd for about $720 million as it focuses on its U.S. shale oil and natural gas operations.
The all-cash deal involves the sale of 226,000 acres of undeveloped land, roughly 93 miles (150 kilometres) south of Fort McMurray, Alberta, to Exxon Mobil’s Canadian unit and Imperial, which is 70 percent controlled by Exxon.
After the deal closes, Exxon Canada will own a 72.5 percent interest in the land, known as the Clyden oil sands leasehold, with Imperial controlling the rest.
The deal is a natural fit for Exxon, which has invested $11 billion in its Kearl oil sands project in northwest Alberta, and gives it access to even more oil to boost its global daily production, which has slid in recent quarters.
Calgary-based Imperial already operates four oil sands projects in Canada and said the stake it is buying from Conoco is a “high-quality addition” to its portfolio.
Conoco, which has been trying to sell the Clyden stake for months, expects to record a after-tax gain of about $450 million from the sale.
The deal, worth about $3,186 per acre, is a “fair price” for Conoco, said Simmons & Co analyst Jeff Dietert, considering the Clyden land is largely undeveloped and similar deals since 2005 have sold for an average price of $2,550 per acre.