Posted on 01/08/2003 8:23:18 PM PST by PAR35
ConocoPhillips will take about a $1.3 billion charge against fourth quarter earnings related to the sale of a "substantial" number of its company-owned service stations, the company said today.
The Houston-based oil company, the product of a merger between Conoco and Phillips Petroleum, said it is still finalizing the amount of charges it would take against its earnings for the first full quarter of operations as a combined entity.
The company did not disclose how many stations would be shed or how many employees would be affected by the sales. ConocoPhillips employs 58,000 people worldwide, 4,200 in Houston.
Analysts indicated, however, that the stations sold would consist mostly of older Phillips and Tosco stations, probably about 2,000. The company is expected to raise about $1.5 billion to $2 billion through the sale of the stations.
"Most of the stations are what originally came out of Tosco," said Jacques Rousseau, analyst with Friedman, Billings, Ramsey & Co. in Arlington, Va.
ConocoPhillps said in November that it planned to shift its focus and spending more into oil and gas exploration and away from refining and retail outlets. The company said it planned to slash spending 25 percent, sell $4 billion in assets and raise its cost-cutting goal from $750 million to $1.25 billion.
The company is selling assets to reduce its high debt. At the end of the fourth quarter, its debt will be about $19.8 billion, the company said.
The announcement only said it will dispose of a substantial portion of its company-owned retail sites and exit certain geographic markets. As a result, it expects to take charges totaling $1.3 billion because the sales price is expected to be less than the estimated value of the property, plant and equipment on its books.
(Excerpt) Read more at chron.com ...
Given the current state of environmental laws, old service station sites are not the easiest property to move.
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