ConocoPhillips Seeking to Sell Louisiana Refinery (COP)

Finacial News Network ^ | 11/30/2011 | FNNO Staff

[thackney]

ConocoPhillips (NYSE:COP) is looking to sell its Alliance refinery in Belle Chasse, Louisiana, according to Bloomberg, which cited two unnamed sources.

The plant may be sold for $700 million-$1 billion excluding inventory, Sam Margolin, a refining analyst for Global Hunter Securities LLC, said.

ConocoPhillips (NYSE:COP) has potential upside of 9.9% based on a current price of $70.81 and an average consensus analyst price target of $77.8.

ConocoPhillips is currently below its 200-day moving average (MA) of $72.03 and should find support at its 50-day MA of $68.05.

In the last five trading sessions, the 50-day MA has remained constant while the 200-day MA has remained constant.

ConocoPhillips is an international, integrated energy company which operates in several business segments. The Company explores for and produces petroleum, and refines, markets, supplies, and transports petroleum. ConocoPhillips also gathers and processes natural gas, and produces and distributes chemicals and plastics.

[thackney]

ConocoPhillips Refineries

The Alliance Refinery, located on the Mississippi River in Belle Chasse, La., 25 miles south of New Orleans, has a crude oil capacity of 247 MBD and processes mainly light, low-sulfur crude oil. Alliance receives domestic crude oil from the Gulf of Mexico via pipeline and foreign crude oil from West Africa via pipeline connected to the Louisiana Offshore Oil Port. The refinery produces a high percentage of transportation fuels, such as gasoline, diesel fuel and jet fuel. Other products include petrochemical feedstocks, home heating oil and anode petroleum coke.

The majority of the refined products are distributed to customers in the southeastern and eastern United States through major common-carrier pipeline systems and by barge.

[SumProVita]

Why do they wish to sell?

[Huck]

Bought me some COP in MAR 09 for 38/share. Wish I’d bought more.

[knarf]

That was MY question also.

We are on the brink of MAJOR energy (oil/NG) ummmm .... momentum.

I don't know which direction, but here in Pennsyltucky, the NG industry is BOOMING.

Does CP expect oil to REALLY drop off?

Personally, I don't think so. I don't see NG taking the place of Petro-fuels ... certainly not in the near (20-30 yrs) future.

[TYVets]

China needs a refinery for it's drilling in the Gulf of Mexico?

The cost EPA upgrades?

Are a couple of uneducated guesses.

[thackney]

ConocoPhillips has already announced they are separating from their refining division. Historically, the refining divisions do not have the profit margin of the upstream, but is less volital as well.

I expect it is related to that decision.

Spun-off refiner gets Phillips 66 name
http://www.chron.com/business/article/Spun-off-refiner-gets-Phillips-66-name-2263224.php

[Hillarys Gate Cult]

My guess too is that they’ll be slammed with more federal regulations killing any profit.

[wita]

Wish I’d bought more.

Of course you do.

I’m Probably wishing right now that I had bought some.

Does that make you part of the 1 percent?

[TYVets]

"ConocoPhillips is an international, integrated energy company which operates in several business segments."

International,,,,,, as in we are taking the money and using it somewhere there are better profits.

[thackney]

Does CP expect oil to REALLY drop off?

Actually that is likely part of the answer, no they don't.

Each part of the business needs to be successful on its own. The oil production, the pipelines, the refineries, the retail sales, etc.

If you make lots of money producing the oil but not much refining it, then why keep paying to upgrade the refinery and spend more and more money on constantly increasing requlations and air permits? Why not sell the oil you produce to someone else?

When oil prices are high, typically the refinery margins get tight. For them, oil is a expense they have to purchase in order to make gasoline.

I work in engineering related to both production and refining. Typically when the oil prices got high, they got busy spending money on production and little on refining. When the oil price dropped, they could make a better margin on refining and they spent money improving refining.

[knarf]

Thank you, thackney.

Clear and succinct ... and very informative