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ConocoPhillips eyes U.S. Gulf of Mexico exit: Sources

By Reuters_News

20:24, 20 July 2022

A file photo shows flags flying outside ConocoPhillips offices in Houston, Texas, U.S., April 30, 2019.
A file photo shows flags flying outside ConocoPhillips offices in Houston, Texas, U.S., April 30, 2019.

By David French

- ConocoPhillips COP.N is exploring a sale of its stake in the Ursa platform and Princess subsea well in the Gulf of Mexico, people familiar with the matter said on Wednesday, in what would mark its exit from deepwater energy production off the U.S. Gulf coast.

The oil producer has been offloading assets as it shifts to become a major operator in the Permian basin, the heart of the shale industry in the United States. It has targeted between $4 billion and $5 billion in divestments by the end of 2023.

Conoco has retained a financial adviser to sell its 15.9% holding in the Ursa/Princess development, which is likely to be valued in the high hundreds of millions of dollars, according to two sources.

The sources cautioned that no deal was guaranteed and Conoco could retain the asset if it does not secure a suitable offer. They spoke on condition of anonymity to discuss confidential information.

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Conoco declined comment.

The Houston-based firm has become a major producer in the Permian, aided by a $23 billion spending spree over the last two years during which it bought Shell's SHEL.L assets in the region and rival Concho Resources.

With U.S. crude prices trading above $100 a barrel, having touched a multi-year high back in March, the backdrop for those wanting to explore potential divestments is favorable. Volatile commodity prices are making it hard for buyers and sellers to agree terms though, industry sources have said.

Conoco's net production from the Ursa/Princess development averaged 13,700 barrels of oil equivalent per day in 2021, according to its website. Shell is the operator, with BP Plc BP.L and Exxon Mobil Corp XOM.N holding minority stakes.

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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