ConocoPhillips and LUKOIL have reached an agreement under which approximately 64.6 million Russian registered shares will be purchased by LUKOIL for $3.44 billion. These shares represent a 7.6 percent interest in LUKOIL, or 40 percent of ConocoPhillips' 163.3 million shares currently owned. This transaction is expected to close in the third quarter of 2010. The remaining 60 percent owned by ConocoPhillips are depositary receipts and are expected to be sold in open market transactions or to LUKOIL by the end of 2011.
"We had a solid quarter, with strong earnings and meaningful progress in executing our plans to create value," said Jim Mulva, chairman and chief executive officer. "E&P delivered production volumes and costs in line with expectations, while our R&M business benefited from improved global refining and marketing margins and higher U.S. refining capacity utilization rates. We are pleased to announce agreement with LUKOIL for the sale of a 7.6 percent interest in LUKOIL. This, along with our Syncrude and CFJ divestments, is consistent with our strategy to enhance returns."
"Over the past five years, ConocoPhillips and LUKOIL have worked closely together to develop opportunities in and out of Russia," Mulva added. "Our experience with LUKOIL and the Russian authorities has been positive, and we look forward to a productive relationship in the future. However, given the expected business environment and our stated strategy to enhance returns and increase distributions, we have made the decision to sell our entire stake in LUKOIL. We expect to accomplish this by the end of 2011, with the proceeds used primarily to repurchase ConocoPhillips shares."
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