ConocoPhillips plans to sell Vietnam assets for $2-$2.5 billion.. Lot more parcels available as part of $5-$10 billion divestiture plan.

ConocoPhillips is planning to dispose of its holdings in the projects located in the South China Sea, said John McLemore, a company spokesman.

Conoco- Vietnam operations overview:

• ConocoPhillips has a 23.3% interest in Block 15-1, and its activities are focused around three producing fields: Su Tu Den, Su Tu Den Northeast and Su Tu Vang; and two fields in development: Su Tu Trang and Su Tu Nau. First production on the Su Tu Den Northeast Field occurred in May 2010, averaging a net 4,000 barrels of oil per day and 4 million cubic feet per day of natural gas. Net production from the three producing fields averaged 18,000 barrels of oil per day in 2010.
• ConocoPhillips has a 36% interest in the Rang Dong Field in Block 15-2. Net production in 2010 was 6,000 barrels per day of liquids and 12 million cubic feet per day of natural gas.
• For transportation services, ConocoPhillips has a 16.3% interest in the Nam Con Son natural gas pipeline. This 244-mile transportation system links gas supplies from the Nam Con Son Basin to gas markets in southern Vietnam and has a capacity of 700 MMcf/d.

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A value for the package

The assets put up for sale could be valued between $2-$2.5 billion, while the peers value the assets at about $1.5 billion. Rationale for the valuation is as follows-

• Production of 26,000 boe/d is valued between ~$1.6-$1.8 billion ($60,000-$70,000/boe- based on the recent BP and TNK-BP deal in Vietnam with a premium factor applied);
• A gas pipeline in general has lifetime of about 20 to 25 years. The Nam Con Son pipeline, which was put into service in 2002, is left with 9-16 years of service. Assuming the daily capacity to be approximately consistent at 700 MMcf/d, the 16.3% stake in the Nam Con Son pipeline is valued at ~$400-$700 million (at an average cost of $1,000/Mcf/d of gas pipeline capacity.)

NOTE: Average cost of $1,000/Mcf/d of gas pipeline capacity is sourced from the Midstream Database of Derrick Petroleum.

Source: Derrick Petroleum Midstream Transactions Database

A brief look up at Conoco’s 2011-2012 divestiture program.

ConocoPhillips has planned for $5 billion to $10 billion in asset sales over 2011 and 2012 as it seeks cash to fund share buybacks and growth. ConocoPhillips sold about $7 billion in assets last year through a program announced in 2009 and intended in part to help reduce debt. The following table shows the divestitures of ConocoPhillips since 2010.

Source: Derrick Petroleum E&P Transactions Database

ConocoPhillips has now expanded the total sales target earlier this year to as much as $17 billion. “The company is marketing the assets in Vietnam as part of the divestiture program”, McLemore said in an e-mail yesterday. The following snapshot shows the exhaustive information collected by Derrick Petroleum on Conoco’s $5-$10 billion divestiture plan.

Source: Derrick Petroleum Deals-in-Play