ConocoPhillips to split into two separate companies

ConocoPhillips is to split into two, separately traded companies, the third largest US oil company said yesterday, sending its stock soaring by nearly 6 per cent in early trade in New York.

The plan is to divide the group's exploration and production (E&P) operations from its refining and marketing (R&M) activities, using a tax-free spin off of the R&M business to ConocoPhillips shareholders.

Jim Mulva, the chairman and chief executive of ConocoPhillips, said the move is designed to maximise value for shareholders.

"Consistent with our strategy to create industry-leading shareholder value, we have concluded that two independent companies focused on their respective industries will be better positioned to pursue their individually focused business strategies," he said.

Mr Mulva will stand down from the business when the separation is completed next year.

The E&P operation will retain the ConocoPhillips name, and both will still be major global players. The R&M-only company will be the fifth-largest in the world.

Mr Mulva said: "Both companies will continue to benefit from the size and scale of their significant high-quality asset bases and free cash flow generation."

The plan does not require a shareholder vote, but is contingent on regulatory approval and the final approval of the board.

If the scheme goes ahead, ConocoPhillips will be the first of the global majors to reverse the oil and gas industry trend for massive vertical consolidation that took hold in the 1990s. But some smaller companies are already making the move. Last month, Marathon Oil spun off its refining arm.