Lukoil agreed to buy back 7.6 percent of its stock from ConocoPhillips for $3.44 billion, according to a statement today by the Houston-based seller. ConocoPhillips said it will sell its remaining Lukoil interest, about 12.4 percent of the Russian company’s stock, by the end of next year.

Second-quarter net income jumped almost fivefold to $4.16 billion, or $2.77 a share, from $859 million, or 57 cents, a year earlier, ConocoPhillips said. Per-share profit excluding such items as gains from asset sales and a drop in the value of an idled German refinery that the company may sell was $1.67, 11 cents higher than the average of 16 analyst estimates.

“ConocoPhillips has been a notorious underperformer, and I think they’re trying to sort of streamline themselves into a more lean operation, thereby improving shareholder value,” said Robbert Van Batenburg, head of equity research at Louis Capital Markets in New York.

The company, which is in the middle of a $10 billion asset- sale program, canceled plans to upgrade its Wilhelmshaven refinery in Germany and this year pulled out of a refining project in Saudi Arabia and an Abu Dhabi natural-gas venture. The Lukoil sale isn’t included in the $10 billion divestiture target. ConocoPhillips previously said it would sell half of its stake in Lukoil, Russia’s largest non-state oil producer.

Change in Course

The change of plans stems from “the expected business environment and our stated strategy to enhance returns and increase distributions,” ConocoPhillips Chief Executive Officer Jim Mulva said in the statement. The company is raising cash to reduce debt and buy back shares.

ConocoPhillips has $7.5 billion invested in its Lukoil interest and expects sales of the shares and its dividends from the Russian company to yield almost $10 billion combined, Mulva told investors today on a conference call.

ConocoPhillips rose 15 cents to $54.59 at 1:58 p.m. in New York Stock Exchange composite trading. The stock has climbed 6.9 percent this year. Lukoil advanced 3.4 percent in Moscow.

ConocoPhillips has already sold about $400 million of its Lukoil stock, Mulva said. Lukoil said in a separate statement that it plans to complete its share purchase on Aug. 16. The U.S. company will sell the rest of its stake on the open market or to Lukoil.

Source: http://www.energytribune.com/ConocoPhillips-to-Sell-Lukoil-Stake-After-Posting-Profit-Gain