ConocoPhillips To Sell 50 Percent of Its Stake in Russia's Lukoil

OAO Lukoil Holdings, Russia's second-biggest oil producer producer missed forecasts when posting a 23 percent drop in 2009 profit on Wednesday, ahead of an expected announcement that its large U.S. shareholder plans to halve its stake.

Photo: ConocoPhillips To Sell 50 Percent of Its Stake in Russia's Lukoil

LUKOIL, Russia's largest privately held oil firm, said net profit last year totalled $7.01 billion. Analysts polled by Reuters had expected profit to drop to $7.5 billion from $9.14 billion in 2008.

U.S. oil major ConocoPhillips (COP.N), which has announced plans to sell $10 billion in assets to cut debt, was expected to announce plans to halve its 20 percent stake in LUKOIL over three years, Reuters informs.

The Wall Street Journal reported that ConocoPhillips plans to sell up to half of its stake in Lukoil, Chief Executive Vagit Alekperov said Tuesday. He added that Lukoil had no plan to buy back shares from the U.S. firm, causing the stock to fall as much as 2.3% in London.

Lukoil's shares rose 70% last year, underperforming the overall Russian equity market, which more than doubled in value.

Analysts suggested the news of ConocoPhillips' share sale may cloud the publication of Lukoil's fourth quarter results. "The stock may remain volatile until the details become clear," said Artem Konchin, analyst at UniCredit.

The company will host a presentation in London later Wednesday, where investors will look for signals of higher cash payments to shareholders and comments on timing and pricing of a possible buyback of ConocoPhillips' 20% stake.

The U.S. oil major wants to sell 10 percent of LUKoil, or half of the stake it now holds, and may do so on the market, Alekperov said. Conoco could sell its shares in small portions, he said, adding that LUKoil saw no need to use its pre-emptive right to buy the stake.

"They could sell it on the wider market in small portions," Alekperov told reporters in the western Siberian city of Khanty-Mansiisk, where he and other businessmen were accompanying President Dmitry Medvedev, The Moscow Times news agency says.